Styloot.com, a fledgling ecommerce website, appears to be the classic Silicon Valley start-up – it has a business model that combines fashion, media and technology, it targets western consumers, and it has a small team of engineers developing proprietary technology. Except that Styloot’s engineers and fashion analysts are not based in California, but in an apartment in Pune, an Indian city with an increasingly global outlook.
“We chose Pune because the cost of living is low, and the quality of life is high,” says Samir Patil, one of Styloot’s co-founders, pointing to the tree-lined, residential street in Model Colony, in the heart of the city, where the company is located. “Mumbai was unviable because the costs of living for the developers would have been too high and we wouldn’t have found the technology talent. And had we been in the US, we would not have been able to create this depth of technology with seed funding.”
Hrridaysh Deshpande, the director for the DYPDC Centre for Automotive Research and Studies, agrees that Pune is poised to become a hub for innovation. “There are more than 70 design entrepreneurs, several design schools and many clients. We plan to apply for ‘world design capital’ status for Pune, to the International Council of Societies of Industrial Design.”
Located 150km to the southeast of Mumbai, India’s financial capital, Pune was historically known as the “Oxford of the east” for its many engineering colleges. Its intellectual leanings are accentuated by a strong cultural tradition, especially in music, literature and theatre. A pleasant climate and proximity to Mumbai also make it a convenient location for a second home for many investors from other parts of the state of Maharashtra.
The city’s economy (and real estate market) is now driven by the presence of two large and growing sectors: automotive manufacturing and information technology. Willy Praet, a Belgian expat who moved to Pune nearly five years ago, is managing director of the India operations of Kongsberg Automotive, a Norwegian automotive components manufacturer. He says he found “the perfect supplier base for our products in Pune and the 50km area surrounding it. Also, the presence of engineering colleges makes recruitment easier.” Praet rents a penthouse apartment in upmarket Koregaon Park in central Pune. “I have everything I need when I come home, it is very comfortable,” he says.
Sagar Chordia, director of Panchshil Realty, one of the city’s biggest real estate developers, is currently constructing two high-end residential projects in Pune: Yoo Pune, in association with well-known designer Philippe Starck, and Trump Towers.
“Sixty per cent of buyers are from Mumbai, where it’s becoming so expensive,” says Chordia.
The 228 Yoo Pune homes are located on a forested, 17-acre site in Hadapsar. Apartments start at Rs80m (US$1.5m) for 5,100 sq ft and 75 units have been sold, with completion scheduled for 2014. Trump Towers, meanwhile, is more centrally located, in Kalyani Nagar. Here 44 penthouse apartments are on offer, in two 22-storeyed towers, with prices starting at Rs130m ($2.4m).
Chordia adds that these two projects capture one end of the spectrum, stating “the advantage of Pune is that projects range from Rs2500 ($46) per sq ft to Rs15,000 ($276) per sq ft”.
Rohit Gera, the managing director of Gera Developments, another local developer, says that the city’s relative affordability is a major appeal. “Pune hasn’t seen crazy price hikes – an average of around 14 per cent,” he says.
Nitin Nyati, chairman and managing director of the Nyati real estate group, observes that “the mid-segment, where apartments are priced between Rs3m ($55,010) and Rs7m ($128,356), is flying because of huge demand from professionals”. Nyati formats typically consist of two- or three-bedroom apartments, priced from Rs4,000 ($73) per sq ft. Higher- end offerings include Nyati Windchimes, a gated community of three- and four-bedroom apartments, soon to be completed. The 188 flats range from 2,385 to 3,202 sq ft and are priced from Rs13.3m ($243,889).
Samantak Das, director of research and advisory services at Knight Frank India, is most optimistic about growth in the western part of the city, particularly in the neighbourhoods of Hinjewadi and Baner, where the highest number of IT jobs is expected to be created. “The walk-to-work concept is popular, and we forecast annual price appreciation of 13-15 per cent for the next five years,” he says.
However, like many Indian cities, growth is not without its challenges. “The roads are just too small in areas where thousands of IT workers commute daily,” says Vineet Nayyar, the vice-chairman of Tech Mahindra, an IT company which employs more than 11,000 engineers in Hinjewadi. Others cite the lack of an international airport and inadequate public transport and road networks, both within and around the city, as constraints.
Gera offers a stoic approach to the city’s shortcomings. “My definition of a developing nation is a place where people live before the infrastructure is in place,” he says, suggesting that it is only a matter of time before the roadblocks to growth are removed.
● Knight Frank research states that 83 per cent of all residential units under construction are priced below Rs7.5m (US$138,000) each
● The report claims that, since 2009, nearly 130,000 residential units were launched in Pune, of which approximately 21 per cent remain unsold
● Property transaction costs include 5 per cent stamp duty, 1 per cent registration (up to a maximum of Rs30,000), 1 per cent VAT and 3 per cent service tax (for properties under construction)
What you can get for …
$100,000 A two- or three-bedroom apartment in several parts of the city
$1m A high-end apartment in an upmarket neighbourhood of the city